Archive for Sunday, July 4, 2010

Energy firm seeks input on efficiency plan

July 4, 2010


Past Event
Energy efficiency public hearing

  • When: Tuesday, July 6, 2010, 7 p.m.
  • Where: Dole Institute of Politics, KU campus, Lawrence
  • Cost: Free
  • More on this event....

To persuade its customers to conserve energy, Black Hills Energy has developed a plan that would pay for home energy audits, give rebates for more energy-efficient appliances and provide incentives for builders to construct greener homes.

That program comes with a $2.49 million annual price tag, which adds $13 a year onto the average residential heating bill and $27 a year for the average nonresidential customer. Over the five-year plan, the average residential heating bill would increase 1.8 percent.

On Tuesday, the Kansas Corporation Commission will have a public hearing in Lawrence giving customers an opportunity to ask questions and comment on the plan before approval is given. The KCC has to approve any changes in heating costs under the plan.

The KCC has asked all investor-owned utilities to come forward with energy efficiency plans. Black Hills is the first in the state to do so.

Energy efficiency

In the first year, Black Hills Energy expects the programs to reach 3,000 of its 110,000 Kansas customers. Any Black Hills customers can tap into the energy-efficiency programs, which are on a first-come first-served basis, director of energy efficiency Matt Daunis said.

Customers can tap into home energy audits, which would cover low-cost measures to conserve energy such as low-flow shower heads, pipe insulation or faucet aerators.

Eventually, rebates will be offered for installing energy-efficient furnaces, boilers and water heaters. Incentives will be given for residents to upgrade their insulation. And home builders can receive between $1,500 and $5,000 for constructing homes that meet high-energy ratings.

The plan also includes programs that reach low-income customers, target affordable housing and educate schoolchildren.

The plans are based on successful energy efficiency-programs that Black Hills implemented in Colorado and Iowa.

“There is a strong demand among the public for energy-efficiency education and products; this program is designed to meet this need,” said Ivan Vancas, vice president of operations for Colorado and Kansas gas. “Consumers are becoming a lot more aware of energy consumption and what they can do to reduce their profile.”

Program concerns

But David Springe, consumer counsel for The Citizens’ Utility Ratepayer Board, says the program is far too expensive.

“It is great for one of the people who get something — they are using less energy, their heating bill is less,” he said. “But the vast majority of people don’t get anything.”

Springe also takes issue with Black Hills’ request to have the KCC set how much revenue the company can collect from its customers rather than base the revenue on how much natural gas that consumers use.

Black Hills is asking for the change in its revenue stream because the energy-efficiency programs are intended to lower the consumption of energy, which would mean the company wouldn’t recover all of its costs if the programs were successful.

“We’re just asking not to be punished for energy efficiency,” Vancas said.

Generally consumers are against giving companies revenue guarantees, Springe said. But he also opposes the request because if revenue is set by the KCC, then the risk for investors has decreased, so the rate of return on their investment should be lowered. It’s not under Black Hills’ current plan, Springe said.

The final item that concerns Springe is Black Hills’ request to share a portion of the savings generated by the energy-efficiency programs. Under the proposal, Black Hills shareholders would receive 10 percent of the total net benefit from the energy savings.

“They are not losing any money; it’s all the customers’ money funding the program, but they want to take 10 percent off the top,” Springe said.

The KCC will have a hearing on Black Hills’ plan in September and issue an order by the end of December.


Bill Griffith 7 years, 10 months ago

For more background: Springe has been opposed to net metering, renewable portfolio standards, and has fought against other utility efficiency programs in the past so his opposition to this docket is not surprising. While it is true that some of the efficiency offerings lately at the KCC could be tweaked, Springe is taking a stand against a critical piece of the puzzle-that if you want utilities to do meaningful ee programs (the cheapest form of new energy) they have to be rewarded for them because they have shareholders to respond to. Public Utility Commissions all over the U.S. are recognizing this fact and responding to it. David does not like change and has never been accused of thinking outside of the box. He is attempting to save a few pennies while dollars whisk away out the back door.

jafs 7 years, 10 months ago

Perhaps, but this proposal makes no sense.

Why should we all fund a program that will increase our costs, give Black Hills more revenue when we use less gas, and increase shareholder profits?

The low-cost stuff is available right now and is "low-cost" so pretty much anyone should be able to buy faucet aerators and low-flow showerheads.

If we are to invest in more expensive items, we should benefit from that, not Black Hills.

If they want to benefit from an investment in energy-efficiency, let them invest in it themselves.

Ken Lassman 7 years, 10 months ago

I don't see how Springe is representing the consumer if he is against all innovation that could lead to more efficiencies and less consumption. Right now, utilities are punished for selling less energy, so where is the incentive for spending money to get people to use less energy?

Seems like if the utilities are given a share of the money saved when less energy is consumed, then they'll get serious about energy efficiency. And as far as consumers are concerned, the utilities will be giving them incentives to spend a little more to be more energy efficient, which makes a lot more sense than what is surely on the horizon: higher costs fuels due to increasing demand, having to build more expensive power plants, etc.

jafs 7 years, 10 months ago

It's not that the companies get "a share" of the money saved, it's that they make more money, and we don't get "a share" of the savings.

The prediction is that our bills will rise, even if we're using less energy and haven't benefited from any of the subsidized improvements.

Everyone can immediately decrease their energy consumption by simply changing thermostat settings, opening windows in spring/fall, etc. And we save money at the same time.

Your point is correct - energy companies have a built-in conflict of interest regarding this issue, which is why they shouldn't be the ones doing it.

Ken Lassman 7 years, 10 months ago

jafs said: "Your point is correct - energy companies have a built-in conflict of interest regarding this issue, which is why they shouldn't be the ones doing it."

This is precisely why they SHOULD be doing a program where they can make money SAVING energy in addition to producing it. Utilities that have been allowed to do this have developed very aggressive energy efficiency programs and per capita energy use has dropped in those areas served. Isn't that the goal? I don't think it is in the interest of the consumer to have a utility that can only make more profit by selling more and more electricity and building more and more power plants to do that.

formerlyanonymous 7 years, 10 months ago

The current program is designed to aid roughly 3% of their customers. Why can't they just put this information in their stupid flyers they send out each month? We can all march down to Ace Hardware or Home Depot with our own money and take care of what we need to. This program is designed to funnel money to shareholders and to corporate coffers.

drs331 7 years, 10 months ago


Under the Black Hills proposal, the vast majority of Black Hills customers will receive no benefit. However, all customers will pay about $26.00 per year (the number in the article is only the first year cost. By year three its $26.00 per year), provide a revenue guarantee without the benefit of lower rates through lowering the shareholder return, and pay the 10% performance incentive. So, for the vast majority of Black Hills customers, why is this a good idea? A few lucky customers will gain, at the expense of the vast majority. And I, and CURB do support well designed energy efficiency programs. This just isn't one of them.

David Springe

Ken Lassman 7 years, 10 months ago

Can you point to a better proposal that some other utilities are using to promote energy efficiency? It's important for utilities to promote folks saving money and also put incentives out there for utilities to promote energy efficiency in ways that won't cut into their bottom line.

Surely there are some progressive programs out there that do both--any info?

Bill Griffith 7 years, 10 months ago

Jafs wrote "Why should we fund a program that will increase our costs.."

The answer is that any new source of power will have costs associated with it. If Black Hills has to increase the amount of natural gas into its territory along with other providers, the price of the gas will go up. In the past we have been subject to natural gas spikes that quickly eat in to family budgets. Well-designed ee programs decrease the amount of the fuel being consumed and make us less vulnerable to fuel price increases. In other words we are investing in protection now against future price increases.

" Black Hills more revenue...'

It is not that Black Hills gets more revenue-but that it gets some revenue. Right now, unless a program is designed correctly, utilities will lose money by doing ee work because they lose revenue. They have to have some type of model where they get a logical return on their investment. The rules are very skewed for getting a better rate of return by building new power plants. By allowing a quick and fair rate of return on investment, utilities are encouraged to invest in ee which in the end saves consumers more money while cutting pollution at a faster pace than any other method.

"The low-cost stuff is available right now..."

True, but a home energy audit is not low cost as it is in the neighborhood of 350 or more dollars. By having the utility pay for this it will open up many houses which will then get an expert opinion on the best strategy for their home. Also, furnaces, boilers, and water heaters are high-end investments and rebates are proven methods to get a higher rate of customer penetration of these items.

jafs 7 years, 10 months ago

Using less will cost less, and average payment programs help protect from unexpectedly large bills.

Individuals can invest in more energy-efficient appliances and save money, as well as energy.

Your point that energy companies have a built in conflict of interest about saving energy is correct, but it's a good reason they shouldn't be involved in that.

There are often government rebate programs, which make a bit more sense that energy company ones. A water heater costs about $300 - not exactly high-end.

Bill Griffith 7 years, 10 months ago

Actually using less often requires an investment up front in insulation, windows, HVAC, etc. Average payment plans work better with electricity than with heating by natural gas.

Utiliites have to be involved in ee because they have franchise areas and can design programs to meed their demographic profile much better than a one-size-fits-all government rebate that may not be there next year.

A 300 dollar water heater may not be much to you or me but to many people they will not invest in it till their old water heater is completely shot. Also, landlords tend not to invest in wh, furnaces, a/c units unless they totally break down.

Liberty275 7 years, 10 months ago

I'll put in an instant electric water heater and disconnect from black hills for 8 months of the year if they'll give me a rebate.

Bill Griffith 7 years, 10 months ago

Hi Dave, long time, no see. First, I don't know if 10% is the right number as a rate of return for Black Hills, only that they need a ROI for doing an ee program and get a decently quick turnaround on their investment to encourage them to continue down this path. There does need to be an incentive for them to do this work HOWEVER I bellieve that penalties should be included if they don't meet certain performance standards. I have not looked at the docket and checked on this aspect (I doubt they put penalties in their filing....) but all ee programs should have to meet certain standards or they get a whack on their shins.

Your statement on why all the customers should pay for something that only some of them get is a common refrain of yours and is predictable. We will have to agree to disagree on that one. But anyone who is a Black Hills customer is eligible for this program and no one is being shunted to the side, correct? Now, BH needs to make sure all their customers know about it and how to apply-but I think most of us can live with a first come first serve outcome. Plus the program could be expanded in the future to add more customers.

I will be interested in CURB's take on the KCPL and Westar ee filings-especially KCPLs.....

Say hi to the more progressive-minded Mrs. Springe for me.

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